Market sentiment was starting to slowly improve from the shock news Friday that U.S. regulators had filed civil fraud charges against Goldman Sachs.

"The Goldman Sachs issue has affected global financial markets negatively, as the (civil) fraud-charges against the bank emerged at a time when global stock markets were at their highs," said Bae Sung-young at Hyundai Securities in South Korea. "But the Goldman issue won't likely affect fundamentals, limiting the impact on the market. A string of recent and upcoming solid earnings reports and economic data will likely lend support to the market."

Some caution was still evident. "It is difficult to see sentiment improve too much against the background of ongoing worries about Greece as reflected in the renewed widening in Greek debt spreads (Monday)," said Credit Agricole Corporate and Investment Bank in a note to clients.

Many regional financial stocks were recouping some of Monday's losses triggered by the Goldman news. In Tokyo, Mizuho Financial Group advanced 0.5%, and in Seoul, KB Financial rose 0.5% and Woori Finance gained 1.6%. ANZ bank added 0.4% in Australia.

In Hong Kong, China Minsheng Banking added 3.8% despite its 2009 results coming in below analysts' expectations as the market responded positively to the company's plan to issue two bonus shares for every 10 shares held as well as a plan to pay a dividend.

Automakers advanced around the region; the sector was up in South Korea on expectations for solid earnings due later this week and peers in Japan got a fillip as the yen weakened against the U.S. dollar.

In Japan, Isuzu Motors rose 5.0% after the auto maker said it now expects a fiscal year group net profit of Y8 billion, a turnaround from its previous forecast for a Y5 billion loss.

Most airline stocks were recovering on hopes air travel constraints imposed across much of Europe due to ash from a volcanic eruption in Iceland will ease. Air New Zealand was up 1.5%, Singapore Airlines gained 1.5%, Cathay Pacific tacked on 1.9% and All Nippon Airways rose 2.1%.

Credit Suisse said in a note that it remains positive on the sector and doesn't expect a big earnings downside despite the cancelled flights. "These airlines are faced with a lack of supply, not a collapse in demand, and the temporary loss in business is recoverable," it said.

Australian shares trimmed early gains after Harvey Norman's sales report, with the stock falling 5.3% after the company said underlying sales for the first nine months of the fiscal year rose 2.2% from a year earlier.

Providing some support, National Australia Bank rose 2.7% after the Australian Competition and Consumer Commission opposed the bank's A$13.29 billion plan to buy AXA Asia Pacific Holdings Ltd. Buyers were piling into the stock on relief the bank wouldn't need to conduct a large capital raising to fund the acquisition. AXA was off 2.8%.

AMP dropped 2.8% as the scuttled deal spurred expectations of a capital raising to fund the company's increased offer for AXA Asia Pacific.

Shares in Thailand rose 1.9% after falling 8.0% over the previous three sessions, but political concerns persisted, with security forces blocking anti-government protestors' plans for a march on the financial district.

Credit Suisse said in a note that risks appear greater now than a week ago. "We advise that investors who do not need to be in Thailand eliminate holdings, and that those needing Thailand positions go defensive."

In foreign exchange markets, the euro was recovering some of its recent losses as investors tentatively stepped into riskier investments as equity markets improved. The single currency was fetching $1.3485 against the U.S. dollar, from $1.3469 late in New York Monday, and was at Y124.90 against the yen, compared with Y124.42. The dollar was buying Y92.62 from Y92.38.

The Australian dollar rose about 10 points to $0.9266 after the release of minutes from the Reserve Bank of Australia's April review indicated hawkish undertones.

"These RBA minutes are pretty backward looking and simply a justification of the hike we saw in April," said Sue Trinh, a strategist with RBC Capital Markets.

The minutes helped push the New Zealand dollar off early lows of US$0.7069. The Kiwi was trading at US$0.7102 from US$0.7127 just before the release of the country's consumer price index, which rose slightly less than expected, adding to expectations the Reserve Bank of New Zealand will be in no hurry to hike interest rates over coming months.

Japanese government bonds were lower as safe-haven bids receded on the Nikkei's gains, with the lead June contract down 0.06 at 139.23 points. The 10-year cash JGB yield was up 0.5 basis point at 1.315%.

May Nymex crude oil futures were up 60 cents at $82.05 per barrel on Globex.

Spot gold was pushing higher, at $1,136.60 per ounce, up $1.40 from the New York close.

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